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[2013] ZAGPJHC 399
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Galaxias Properties CC v Georgiou (A5031/2011, 2010/8562) [2013] ZAGPJHC 399 (29 November 2013)
IN THE SOUTH
GAUTENG HIGH COURT
(JOHANNESBURG)
APPEAL TO THE
FULL COURT
Case
No. A5031/2011
SGHC
Case No. 2010/8562
DATE
: 29 NOVEMBER 2013
In the matter
between:
GALAXIAS
PROPERTIES CC
.............................................
Appellant
(Applicant in the
Court a quo)
And
SAVVAS ANGELO
GEORGIOU
.......................................
Respondent
(Respondent in
the Court a quo)
JUDGMENT
VERMEULEN AJ
[1] The Appellant
appeals to this Court with leave from the Supreme Court of Appeal
against the judgment of Tsoka, J., dismissing
an application by the
Appellant as Applicant in the Court a quo for the eviction of the
Respondent from certain business premises
situate in Nigel and
described in the notice of motion as Shop 1, Ferryvale shopping
centre, 25 Beverley Road, Nigel.
[2] The Appellant
sought the eviction of the Respondent as the owner of the shopping
centre, having purchased the property on which
the shopping centre is
situate from the previous owner who was also the lessor in terms of a
written agreement of lease entered
into with the Respondent on 24
January 2001.
[3] The Appellant
purchased the property during 2005, in terms of an agreement styled
“Sale of Rental Enterprise” pursuant
whereto the property
was sold, and the lease of the premises concerned ceded and assigned,
to the Appellant. The property was transferred
to the Appellant on 31
January 2006.
[4] The lease, by
way of clause 5 thereof, provides that the rental is payable monthly
in advance on the first day of each month.
[5] The consequences
of a material breach of the agreement are provided for in clause 26
of the lease. Where the breach takes the
form of a failure to pay
the rental on the date when it falls due, as provided for in clause
26.1 of the agreement, the landlord
has the right to give the tenant
ten days’ written notice requiring the tenant to make payment
of the rental.
[6] Should the
tenant fail to make such payment within the ten day-period, the
landlord acquires the right to cancel the lease forthwith
and to take
possession of the premises and for that purpose to institute whatever
action may be necessary for the immediate ejectment
of the tenant
from the premises without prejudice to his right to claim arrear rent
and such other damages as he may have sustained.
[7] In terms of
clause 26.2 of the agreement, if during any period of eighteen months
the landlord has on two occasions given the
tenant notice in terms of
paragraph 26.1 of the tenant’s failure to pay the rent or any
other sum payable by the tenant,
the tenant shall not thereafter be
entitled to any notice in respect of any other similar breach during
the same eighteen months
and the landlord may, immediately without
written notice exercise its rights in terms of the agreement.
[8] The lease
agreement, furthermore, contains a non-variation clause in the terms
provided for in clause 40 of the agreement as
follows :-
“This
agreement of lease constitutes the sole agreement between the
parties. No waiver by the landlord of its rights or variation
or
cancellation hereof shall be binding upon the parties unless such
waiver, variation or cancellation shall be reduced to writing
and
signed by both parties.”
[9] The Applicant
alleges that the Respondent breached the agreement of lease by; inter
alia, failing to pay the agreed monthly
rental timeously for the
months of April 2009 as well as November 2009. The Respondent admits
that he failed to pay the rent on
the 1st day of the months as stated
above, but alleges that the Applicant condoned these late payments
and waived its right to
cancel the agreement arising from such late
payments. The Respondent, indeed, alleges that he never made timeous
payment in terms
of the lease, that the Applicant throughout accepted
such late payments and, in so doing, the Respondent seeks to set up
the waiver
as stated above.
[10] The Respondent
admits having received the first letter of demand addressed to him on
the Appellant’s behalf by the latter’s
attorneys on 16
April 2009. This letter reads as follows :-
“We address
this letter to you on behalf of our client.
You are in breach of
the agreement of lease dated 24 January 2001 in that :-
1. You are in
arrears with payment of rent for April 2009 in the amount of
R66,292.45.
2. You are in
arrears with payment of water consumption in the amount of R342.00.
3. You are in
arrears with payment of rates and taxes in the amount of R978.47.
Client also
instructed us to collect interest in the amount of R5,956.69 in
respect of interest charged on late payments.
In terms of clause
26 of the agreement of lease you are hereby given notice to rectify
the breach aforementioned within 10 [ten]
days after receipt of this
notice, failing which, we hold instructions to issue summons for
payment of the arrear amount, interest
and costs without any further
notice.
Kindly further take
notice that you are also held responsible for the legal costs in
respect of the drafting of this letter by the
Sheriff.”
[11] I have quoted
this letter in full in the light of the defence raised by the
Respondent and the line of reasoning adopted by
the Court a quo, to
which I return hereunder. For present purposes it suffices to point
out that this letter qualifies as a notice
within the meaning of
clause 26.1 of the agreement of lease. As such, the letter has
ramifications in the sense that it triggers
the mechanism provided
for in clause 26.2, in terms of which the landlord obtains the right
to cancel the lease without further
written notice if, within
eighteen months from the date of the previous breach, the Respondent
should fall into arrears again.
[12] This is
precisely what happened, in that, during November of 2009, the
Respondent was again in default of paying the rental
due for November
timeously in accordance with the provisions of the agreement. The
Appellant sent a notice to the Respondent calling
upon him to remedy
the breach in terms similar to those contained in the notice of 16
April 2009. Again, the Appellant’s
allegations to this effect
are undisputed.
[13] During February
2010, the Respondent was yet again in default, in that he failed to
timeously pay the rental for this month
on the due date. On this
occasion the Appellant elected to exercise its rights in terms of
clause 26 and, accordingly, gave notice
of its election to cancel the
agreement and to demand that the Respondent vacate the premises by no
later than 31st March 2010.
This it did by way of a letter addressed
by its attorneys of record to the Respondent dated 11 February 2010.
[14] The Respondent,
whilst admitting its default, sought to contend, in paragraph 8.18 of
its answering affidavit, that the late
payment in February did not
fall within the same eighteen month period as the previous defaults
on the basis of the contention
that the eighteen month period falls
to be reckoned from the inception of the lease and that, if so
reckoned the breach did not
occur within the same eighteen month
period. This defence needs merely to be articulated for its lack of
substance to be revealed.
Clause 26.2 of the agreement provides that
the eighteen month period commences on the date of any breach; it
does not commence
on the date of the lease agreement itself. The
argument based on these contentions was rightly not pressed during
the hearing
of the appeal before us.
[15] Another
contention on the part of the Respondent was that, prior to the
Respondent’s receipt of the letter dated 11 February
2010
addressed to it by the Appellant’s attorneys of record in which
the Appellant’s election to cancel the agreement
is recorded,
the Respondent had paid the overdue rental amount and that,
accordingly, the Respondent had rectified the breach before
notice of
cancellation was communicated to it on behalf of the Appellant. In
this regard the Appellant replied that the letter
of cancellation,
annexure “E” to the founding affidavit, was served by the
Sheriff at 09h00 on Thursday the 11th of
February 2010 and that the
deposit slip evidencing the deposit of the overdue rental for
February 2010, annexed to the Respondent’s
answering affidavit
is dated the same day, but that Standard Bank, Nigel, where the money
was deposited only opens at 09h00 during
weekdays and that the
deposit must, accordingly, necessarily have been after receipt by the
Respondent of the notice of cancellation.
I return to deal with this
defence hereinlater.
[16] In terms of
what may be regarded as his main defence, the Respondent alleged that
the requirement of timeous performance by
him of the obligation to
pay rental on the first of each month was never enforced by the
Applicant. Indeed, in paragraph 5.1 of
his Answering Affidavit, the
Respondent went further to allege that there was a specific agreement
between himself and the landlord
that he could pay the rent if and
when he had the money available. In my view this latter defence is
not entirely harmonious with
the defence that the Appellant waived
its rights in terms of the agreement to insist upon timeous
performance of the obligation
to pay the rental. Indeed, the two
defences are mutual exclusive in the sense that, if the agreement of
lease was amended to provide
for the specific agreement referred to
by the Respondent to the effect that he could pay as and when he
pleased, then the issue
of a waiver on the part of the Appellant’s
rights as a landlord does not arise. On the other hand, if there was
a waiver,
the presupposition is that the clause giving rise to the
right which was waived could not have been amended as alleged. What
the
defences have in common, however, is that both fall foul of
clause 40 of the agreement, which precludes reliance by the lessee on
an oral waiver or variation of the lease agreement in the manner
alleged by the Respondent.
[17] The Court a quo
held that it was common cause that, during the period 2000 to 2008,
the Respondent on eleven occasions failed
to pay the rental on due
date and that the Applicant, instead of demanding payment of rental,
failing which cancellation of the
agreement and ejectment of the
Respondent from the premises [was demanded], the Applicant contented
itself with the demand that
the Respondent bring its account up to
date. I take this to mean that the Appellant did not notify the
Respondent that it would
insist on due and punctual compliance with
the terms of the agreement and that it would cancel the agreement if
the Respondent
were to persist in paying the rental after the due
date.
[18] The Court a quo
referred to Garlick Ltd v Phillips
1949 (1) SA 121
AD, on the basis
that the facts in that case were similar to the present matter and
referred to the Court’s finding in that
case that the
landlord’s long continued acquiescence, without protest, in the
late payment of rental was tantamount to a
tacit permission given to
the lessee to pay his rent late until further notice. Reference was
also made to Myerson v Osmond Ltd
1950 (1) SA 714
AD, where the
Appellate Division referred to the same principle as articulated in
the Garlick-case, but distinguished the matter
on the facts. On the
basis of these decisions the Court a quo concluded that it seems
settled that the Respondent in the present
matter cannot be ejected
from the premises for non-payment of rental on 1 February 2010.
[19] The Court a
quo, nevertheless, referred to clause 40 of the lease agreement and
acknowledged that the approach of the Appellate
Division in S.A.
Sentrale Ko-öp Graan Maatskappy Bpk v Shifren en Andere
1964 (4)
SA 760
(A) in relation to a non-variation clause similar in its terms
to those contained in clause 40 of the present agreement, would
preclude reliance by the Respondent upon the alleged oral waiver or
variation of the agreement in the manner contended for by it.
[20] The Court a
quo, however, held that the position adopted in the Shifren-case in
1964 has changed since 1994, with the advent
of the constitutional
disposition. The Court a quo further held that, since any conduct or
law which is inconsistent with the constitution
is unlawful, the
question that arises in a constitutional context is : “[d]oes
public policy permit a landlord, such as the
applicant [the present
Appellant], who frequently from inception of the agreement in 2001
until February 2010, acquiesced, without
protest, in the late payment
of rent, suddenly and without warning to the lessee such as the
Respondent to cancel the lease and
demand ejectment of the Respondent
from the premises?” The Court a quo held that this question
must be answered on the basis
of principles as interpreted and
developed having regard to the values espoused in the Constitution.
[21] The Court a quo
referred to the decision of the Constitutional Court in Barkhuizen v
Napier
[2007] ZACC 5
;
2007 (5) SA 323
(CC), where Ngcobo J., writing for the
majority, stated at paragraph 73 of the judgment:
Public policy
imports the notions of fairness, justice and reasonableness. Public
policy would preclude the enforcement of a contractual
term if its
enforcement would be unjust or unfair. Public policy, it should be
recalled, ‘is the general sense of justice
of the community,
the boni mores, manifested in public opinion.’”
[22] The Court a quo
also referred to a full bench decision of the Eastern Cape High Court
in Nyandeni Local Municipality v MEC
for Local Government and Others
2010 (4) SA 261
(ECM). The citation to which the Court a quo referred
appears at para.126 of the judgment, where Alkema J. stated:
In balancing the
pacta sunt servanda principle as expressed in Shifren against the
right to engage in the due process of law under
s 34, and to be
protected against an abuse thereof, I have no hesitation in coming to
the conclusion, on the facts of this case,
that public policy in this
particular case favours the rule of law as a foundational cornerstone
of our Constitution. I therefor
believe that the facts and
circumstances of this case justify a departure from the Shifren
principle.” (Own emphasis).
[23] As pointed out
already, the Court a quo found that the Appellant ought to have
warned the Respondent that it intended to cancel
the agreement if the
Respondent persisted in paying the rentals after the due date in
terms of the agreement. The Court a quo considered
it significant
that the Appellant suffered two instances of a default on the part of
the Respondent between April and November
2009, when the Respondent
failed to pay on time, without cancelling the agreement. When the
Respondent again failed to pay timeously
in February 2010, the
Appellant summarily cancelled the agreement, without having warned
the Respondent of its intention to do
so. This, so the Court a quo
held, would be regarded in terms of public policy as unfair, unjust
and unreasonable and the Appellant
cannot “seek shelter in the
Shifren-clause” in these circumstances.
[24] The Court a quo
sought support for this approach in the Garlick decision at pp.
132-133 of the report, where the following
is stated:
But I am inclined to
think that, if a breach of a duty be necessary, there was a duty
resting on appellant which was not performed.
So long as its attitude
remained one of indifference towards late payments of rent, there was
of course no necessity to speak,
but when appellant’s state of
mind changed from one of indifference to one of a desire or intention
to take advantage of
late payments of rent in order to obtain
ejectment, then I think the duty arose to make that changed attitude
known to the respondent.
A responsible man in the appellant’s
position would have known that a long continued receipt by him of
late payments of
rent without protest such as occurred in this case,
would lead the Respondent into the belief that he had no objection to
late
payments and did not treat them as breaches of contract and
would not, without notice, do so in the future. A duty therefore
rested
on appellant if it intended to treat late payments of rent in
the future as breaches of contract and to take advantage of them,
to
inform respondent of that change of mind.”
[25] The Court a quo
was alive to the fact that the agreement in the present matter does
not impose a duty on the Applicant to inform
the Respondent if the
Applicant wishes to take advantage of the Respondent’s late
payment of rental and obtain ejectment
of the Respondent from the
premises. The learned Judge a quo reasoned, however, that the duty
referred to in the Garlick-decision
is “the brainchild of
public policy” which, in turn, is the embodiment of the
“general sense of justice of the
community”, the boni
mores, manifested in public opinion, which demands of the Applicant
to act fairly, reasonably and justly
towards the Respondent.
Therefore it was held that the Respondent, in the circumstances, is
entitled to know that his late payments
of rental would not be
tolerated and that the Applicant intends to enforce the terms of the
agreement and demand prompt payment
of rental.
[26] I regret that I
am unable to agree with this line of reasoning. There are at least
two fundamental differences between the
facts of this matter and
those which formed the subject matter of the decision in the
Garlick-case. First: there was no non-variation
clause included in
the agreement of lease which featured in the Garlick-decision.
Second: the conduct of the lessor in the present
case cannot be
equated to the attitude of indifference towards late payments of rent
which characterised the conduct of the lessor
in the
Garlick-decision. These distinguishing factors place the current
matter in a completely different purview to that which
obtained in
the Garlick-decision. The decision in that case turned on the fact
that the attitude of indifference espoused by the
lessor towards the
late payments of rental by the lessee indicated either that there was
a tacit amendment of the agreement by
the conduct of the lessor, or
that the conduct of the lessor gave rise to an estoppel, in that the
aforesaid conduct constituted
a representation to the lessee that the
lessor would not, without more, use the late payments as a ground for
the cancellation
of the agreement. The duty imposed upon the lessor
in the Garlick-decision arose from the aforesaid considerations, to
which regard
could be had since the parties did not covenant to the
contrary; it was not imposed ex cathedra simply on account of a
perceived
duty on the part of the lessor to act fairly, reasonably
and justly towards the lessee; notwithstanding the parties’
covenant
that regard may not be had to those very considerations. A
general duty by one contracting party to act fairly, reasonably or
justly towards his counterpart, in the absence of a specific
provision in the agreement to this effect, or where such a term is
implied, has for good reason never been acknowledged in our law, for
according to whose lights must its alleged breach be determined?
See
in this regard the pithy observations of Harms DP in Bredenkamp and
Others v Standard Bank
2010 (4) SA 468
SCA at paragraphs 27 and 28 of
the judgment.
[27] The SCA, in
Brisley v Drotsky, supra, emphasised the dangers inherent in
permitting the sanctity of contracts to hang by the
thread of the
idiosyncrasies of individual contracting parties or the perception of
the prevailing equities by individual judges.
[28] This was also
one of the issues which both the minority as well as the majority
grappled with in the decision of the Constitutional
Court in
Barkhuizen v Napier, supra. The judgment by the majority, spoken for
by Ngcobo J., is pertinent in this regard. The decision
was concerned
with the enforceability of a time-bar clause in an insurance
contract; it addressed this issue by posing the question
whether the
relevant clause offends against public policy which, in the
post-constitutional era, is evidenced by the values which
underpin
the Constitution, being, inter alia, the values of human dignity,
equality, the advancement of human rights and freedoms
and the rule
of law. Ngcobo, J. pointed out (at paragraph 30 of his judgment),
that this approach leaves space for the principle
of pacta sunt
servanda to operate, but allows courts to decline to enforce
contractual terms that are in conflict with constitutional
values,
even though the parties may have consented to them.
[29] The weight to
be attached in this assessment to the fact that a particular
obligation was freely and voluntarily undertaken
comes to the fore in
Ngcobo. J.’s description of this consideration as “a
vital factor” which will determine
the weight to be attached to
the values of freedom and dignity (vide paragraph 57 of the
judgment). He emphasised that public policy
requires that contractual
obligations freely and voluntarily undertaken should be honoured,
precisely because this requirement
gives effect to the central
constitutional values of freedom and dignity. This emphasis is
entirely harmonious with the approach
by the SCA to the same question
in, inter alia, Brisley v Drotsky, supra; Afrox Health Care Ltd v
Strydom
2002 (6) SA 21
(SCA), South African Forestry Co. Ltd v York
Timbers Ltd
2005 (3) SA 323
(SCA), Bredenkamp v Standard Bank,
2010
(4) SA 468
(SCA), Law Society of the Northern Provinces v Mahon
2011
(2) SA 441
(SCA) and Potgieter and Another v Potgieter NO and Others
2012 (1) SA 637
(SCA).
[30] In having thus
focused on what admittedly constitutes a selection of dicta from
Ngcobo, J.’s judgment, I am not suggesting
that his judgment as
a whole is to be understood as an uncritical endorsement of the maxim
pacta sunt servanda at all costs. But
neither can the judgments of
the SCA, referred to in the paragraph above, be seen in such a light.
In the context of the broader
judicial debate on the present topic,
the judgments by Wallis AJ (as he then was), in Den Braven SA (Pty)
Ltd v Pillay
2008 (6) SA 229
(D), on the one hand, and Davis J., in
Advtech Resourcing (Pty) Ltd t/a Communicate Personnel v Kuhn and
Another
2008 (2) SA 375
(C) and Mozart Ice Cream Franchises (Pty) Ltd
v Davidoff and Another
2009 (3) SA 78
(C), on the other, at first may
appear to represent nothing less than the thesis and antithesis
underpinning two opposing philosophies;
but closer analysis of each
position, in the broader context of the present debate, suggests
rather that their respective approaches
approximate the contrapuntal
voices in an intricate fugue, with each voice contributing vitally to
the harmonic whole.
[31] The citation
from Ngcobo, J.’s judgment in the Barkhuizen-decision, quoted
in paragraph 24 above, was relied upon by
the Court a quo in arriving
at its conclusion that the lease agreement should not be enforced,
because a reliance by the lessor
on the non-variation clause therein
would be unfair and unjust and thus offend against public policy.
This conclusion was reached
without having identified any specific
constitutional value which was allegedly breached by the lessor’s
reliance upon the
non-variation clause. In other words, the abstract
concepts of fairness and justice were regarded by the Court a quo as
independent
grounds upon which to interfere with a private
contractual relationship. This approach is not sanctioned by the
majority judgment
in Barkhuizen v Napier, supra. The majority in
Barkhuizen considered whether the time-bar clause in that case
offends against the
constitutional right enshrined in s. 34 of the
Constitution, being the right to fair access to the Courts to have
disputes judicially
determined. The majority came to the conclusion
that the disputed clause is neither unjust nor unfair, because s 34
contains no
absolute bar against time-limitation clauses and, in the
result, that there is no reason why public policy would not tolerate
such
a clause if it affords the claimant a fair and reasonable
opportunity to seek judicial redress. See paragraphs 44 - 52 of the
judgment.
The majority in the Barkhuizen-decision, in other words,
did not use fairness and justice as independent grounds on the basis
whereof
the terms in a contract fall to be assessed.
[32] The decision by
the full bench of the Eastern Cape High Court in Nyandeni Local
Municipality v The MEC for Local Government
& Others, supra, to
which the Court a quo referred, also formed the mainstay of the
argument advanced to this Court on appeal
on behalf of the
Respondent. This decision, however, also affords no support for the
line of reasoning adopted by the Court a
quo. In the Nyandeni Local
Municipality-decision, Alkema, J. was at pains to acknowledge the
full ambit of the Shifren-decision
and the decision by the SCA in
Brisley v Drotsky, supra. The learned Judge’s carefully
reasoned assessment of the Shifren-principle
in paragraphs 41 to 63
of the judgment in the Nyandeni Local Municipality-decision clearly
evidences such an acknowledgement.
The balancing process between the
pacta sunt servanda-principle against the right to engage the due
process of law under s. 34
of the Constitution and to be protected
against an abuse thereof, was undertaken by Alkema, J. in the light
of his previous finding
that, on the facts of that case, the resort
to the non-variation clause in the agreement which featured there,
resulted in an abuse
of process which entailed that the Appellant’s
rights to due process of law would have been breached. This being
the case,
the Court held that the implementation of the non-variation
clause in that case would be so unreasonable as to offend public
policy
and on that basis the Court held that the clause was
unenforceable. The position in this case is materially different:
As pointed
out already, there is no claim in this case that any
identified constitutional right was breached in consequence of the
enforcement
of the non-variation clause. The argument is simply
that, because of the perceived unfairness which would result from its
implementation,
the non-variation clause ought to be regarded as pro
non-scripto. Alkema, J. expressly disavowed such an approach. See
paragraph
90 of the decision.
[33] What is more,
the Appellant in the present case manifestly did not acquiesce in the
late payment of rentals by the Respondent;
of that the notices by the
Appellant’s attorneys consequent upon the Respondent’s
breaches in April and November 2009
bear incontrovertible testimony.
[34] The Court a
quo’s line of reasoning has the effect of rendering the
non-variation clause nugatory under circumstances
where the decision
by the SCA in Brisley v Drotsky, supra, which was binding on the
Court a quo, militated against such a decision.
The Court a quo was
accordingly not justified in these circumstances from departing from
the principles laid down in the Shifren-decision.
[35] I, in any
event, do not agree with the sentiment that the Respondent has any
basis for complaint if his repeated breaches of
the agreement led to
the cancellation of the agreement without further notice to him. The
terms of the rental agreement in general,
and clause 26 in particular
are not unduly onerous. The lessor has to suffer two breaches of the
lease in an eighteen month period
before the right to cancel without
notice in terms of the lex commissoria accrues. A late payment as
such does not give rise to
a right to cancel on the part of the
lessor, who is obliged in terms of clause 26.1 to afford the lessee
ten days grace within
which to remedy the default. These provisions
do not evidence an unequal bargaining position between the parties to
the agreement,
nor was any other evidence tendered to suggest that
such a relationship existed. From the very attitude adopted by the
Respondent,
to the effect that he paid late throughout the duration
of this lease, one gets the impression rather that it was the
Appellant
who was the long suffering party. This is, furthermore,
not a standard term contract. In the absence of a defined
constitutional
right in favour of the tenant which is impacted upon
by the landlord’s invocation of the non-variation clause, no
constitutional
issue arose and the resort to fairness and justice was
unwarranted.
[36] There is,
furthermore, no significance in the fact that the Appellant, on the
occasion of the breaches in April and November
2009, merely notified
the Respondent to correct the breaches without cancelling the
agreement, as the Court a quo found. The right
to cancel the
agreement had not accrued to the Appellant in April or November 2009,
by reason of the provisions of clause 26, which
I have already
adverted to above. That right only accrued in February 2010 when the
Respondent again defaulted, having received
two notices in terms of
clause 26 in the eighteen month period preceding the final default.
If the Respondent really did not know
what the consequences of his
continued breaches might be and he wanted to inform himself in this
regard, he needed merely to have
read the lease agreement of which he
presumably had a copy. If he did not have a copy, the Appellant
would presumably have been
more than willing to provide him with one.
[37] In the result,
I hold that the Court a quo erred in its finding that the Respondent
was at liberty to advance the defences
of an oral variation of the
agreement or an oral waiver of the Appellant’s rights to cancel
the agreement under the circumstances
of the matter.
[38] The Court a quo
did not deal with the further defence that the breach was remedied
before notice of the cancellation was imparted
to the Respondent. In
my view, this defence also lacks substance, for the following reasons
:-
[38.1] The Appellant
alleged that, as a result of the Respondent’s breach of the
agreement in February 2010, which breach
occurred within eighteen
months of the Respondent’s breach during April 2009, there
having been a second breach in November
2009, elected to cancel the
agreement with the Respondent.
[38.2] This
allegation is plainly correct, if regard is had to the provisions of
clause 26.2 of the lease agreement, which is in
the nature of a lex
commissoria. The effect of this forfeiture clause is simply that the
Appellant obtains a right to cancel the
agreement without notice to
the Respondent, should the Respondent breach the agreement for a
third time within an eighteen month
period, reckoned from the first
breach, provided that the Appellant gave notice to the Respondent to
remedy the breach on the first
and second occasions.
[38.3] The
Respondent relied upon the decision in Swart v Vosloo
1965 (1) SA 100
(AD) at 105G where Holmes, JA. said :-
“… It
must be taken as settled that, in the absence of agreement to the
contrary, a party to a contract who exercises
his right to cancel
must convey his decision to the mind of the other party; and
cancellation does not take place until that happens.”
[38.4] The
Respondent also referred to the decision in Segal v Nazzur
1920 CPD
634
at 644 – 645 and Culverwell & Another v Brown
1990 (1)
SA 7
(A).
[38.5] As is plain
from the citation from Swart v Vosloo in paragraph 31.3 above, the
general rule stated therein is subject to
modification by the parties
in their agreement. The decision in Culverwell & Another v
Brown, supra, deals with an innocent
party’s right to decide
whether or not to accept a repudiation by his counterpart. The point
was made in this decision that,
should the innocent party elect not
to accept the repudiation, the contract remains of full effect. This
does not assist the Respondent’s
argument at all, because he is
not the innocent party. He was in breach of the agreement as from 2
February 2010. No further
notice to him was required, because on
this third breach within an eighteen month period, the effect of the
lex commissoria was
that dies interpellat pro homine. See in this
regard Voet 18.3.2 where the principles of a lex commissoria are
explained.
[38.6] In 18.3.4,
Voet addresses the issue of mora debitoris as follows :-
“This lex
commissoria takes effect as a general rule by simple effluxion of the
stated time, nor is a demand necessary on
the part of the vendor in
order to constitute the purchaser in default, since it is
pre-eminently a case in which dies interpellat
pro homine.”
[38.7] In the cited
texts, Voet deals with a lex commissoria in an agreement of sale, but
the principles are of course equally applicable
to other agreements
including a lease agreement.
[38.8] In Schuurman
v Davey
1908 TS 664
, the right to cancel accrued on the 2nd of April
and it was exercised on the 17th. Innes, CJ. dealt with this factor
as follows
(at p. 671 of the decision) :-
“Now I am not
prepared to say that a delay of fifteen days is such an interval as
would be sufficient, in itself, to deprive
the seller of his right to
cancel. Certainly the court would not be justified in inferring
waiver on his part merely because he
delayed the fifteen days, and
there is nothing to show that the buyer in this case was in any way
prejudiced by the delay.”
[38.9] An
application of these principles to the facts of the present matter is
dispositive of the Respondent’s defence.
In the case of a
forfeiture clause, the right to cancel accrues upon the happening of
the event upon which the forfeiture clause
is predicated. The party
in whose favour the right has accrued cannot be deprived of it merely
because the other party, who is
in mora, tenders to, or in fact pays
on that day. In Schuurman v Davey, supra , Innes CJ stated that
nothing but waiver, undue
lapse of time or some default on the part
of the party in whose favour the right accrued can deprive him of
this right. This decision
by Innes CJ. has consistently been followed
since its delivery. See Boland Bank Ltd v Pienaar & Another
1988
(3) SA 618
(A) at 622C. In the present case, given the provisions of
clause 40, only a waiver in writing by the Appellant would have
sufficed
to deprive it of the accrued right to cancel. There is no
suggestion that there was an undue lapse of time or any default on
the
part of the Appellant in this regard. There is accordingly no
substance to this defence.
[39] I would
accordingly uphold the appeal. The Appellant is entitled to the
costs of the application before the Court a quo on
the scale between
attorney and client, because the lease agreement, by way of clause 34
thereof, entitled the Appellant to such
costs
[40] I would
accordingly make the following order:-
A. The appeal
succeeds with costs including the costs occasioned by the employment
of senior counsel.
B. The Court a quo’s
order is set aside and substituted with the following order :-
1. The Respondent
and all persons occupying through or under him is ordered to vacate
Shop 1, Ferryvale shopping centre, 25 Beverley
Road, Nigel within ten
calendar days from the date of service of this order upon the
Respondent.
2. The Sheriff or
his deputy for the district of Nigel is authorised to place the
Applicant in possession of Shop 1, Ferryvale shopping
centre, 25
Beverley Road, Nigel should the Respondent fail to comply with
paragraph 1 of the order.
3. The Respondent is
ordered to pay the costs of this application on the scale as between
attorney and client.
VERMEULEN AJ
MOSHIDI J
(I concur. It is
so ordered.)
KGOMO J
(I concur.)
Appearances:
For the
Appellant:
LOCKETTS
ATTORNEYS
Appellant’s
Attorneys
c/o MONTé
COETZER INC.
1st Floor,
National Bank House
84 Market Street
Johannesburg
Ref.: L
Etsebeth/AJVR/G984
Tel. : (011)
814-8151
Appellant’s
counsel: JP Coetzee SC
For the
Respondent:
DE BEER ATTORNEYS
Respondent’s
Attorneys
c/o SALEY LAHER
ATTORNEYS
28 The Avenue
Orchards
Ref.: Mr J G W De
Beer/Louw/1877
Tel. : (011)
814-8201
Respondent’s
counsel: G Bizos SC and C Acker
Hearing Date:
20 March 2012
Judgment Date: 29
November 2013
S U M M A R Y
Eviction proceedings
from business premises based on breach of written lease agreement –
the lessee regularly defaulted by
not paying monthly rental in time –
the lessor adopting laissez – faire attitude towards such
default prior to finally
cancelling lease agreement – the
lessee raising several defences, including oral variation of
non-variation clause in lease
agreement and waiver by the lessor and
estoppel – whether lessor’s right to enforce the
agreement and the non-variation
clause would offend public policy
considerations of fairness, justice and reasonableness – in all
circumstances of the case
lessor entitled to cancel the lease
agreement and an order to eject.